Disclaimer: The prime rate directly influences the rates on HELOCs and home equity loans.
Key Points
• Home equity loan rates are influenced by the borrower’s credit score, debt-to-income ratio, and market conditions.
• It’s a smart move to shop around and compare offers from different lenders to snag the best rates.
• Even a small variance in interest rate can translate to significant savings or added expenses over time.
• Home equity loans typically have lower interest rates than unsecured loans, making them a cost-effective solution for larger expenses.
• The interest on home equity loans is often tax-deductible if you use it for home improvements.
Home equity loans can be a smart financial move for homeowners in need of a lump sum of cash. In this guide, we’ll cover the current home equity loan rates in Asheville, North Carolina, and how you can secure the best deal. We’ll also discuss the factors that influence rates, including your credit score, debt-to-income ratio, and the state of the market. Finally, we’ll look into the benefits and risks of home equity loans and provide some tips for getting the best rate. By the end of this guide, you’ll have a clear understanding of whether a home equity loan is right for you and how to get the best rate possible.
What is a home equity loan? It’s essentially a second mortgage that allows you to borrow a lump sum based on the equity you have in your home (the value of your home minus how much you owe on your home loan). Lenders typically let you borrow up to 85% of your equity. These loans usually come with fixed interest rates and predictable monthly payments. They can be a great way to finance large expenses, like home renovations or debt consolidation, and often have lower interest rates than unsecured loans.
Home equity loan interest rates are influenced by a variety of factors, including economic conditions and your own financial profile. Lenders add a margin to the prime rate to determine the interest rate you’ll be charged. If the prime rate is, say 7.50%, and the lender’s margin is 2%, your home equity loan rate would be 9.50%. Your credit score and debt-to-income (DTI) ratio help lenders determine the margin, and ultimately the home equity loan interest rate.
Your interest rate is a big deal when it comes to the cost of your home equity loan. Even a fraction of a percentage point can add up to significant savings or added expenses over the life of your loan. For instance, a $100,000 home equity loan with a 15-year repayment term might mean a monthly payment of $985 at an 8.50% interest rate, with a total interest cost of $77,253. But bump that rate to 9.50%, and you’re looking at a $1,044 monthly payment and $87,960 in total interest. That’s a $10,700 difference! Understanding how these rates play out in the long run can empower you to make a savvy choice between different types of home equity loans.
Interest rates for home equity loans and HELOCs naturally fluctuate, as does the prime rate on which they’re based. The prime was a mere 3.25% in 2020 before rising to 8.50% in 2023. These shifts can send ripples through the home equity loan market in Asheville. It’s wise to keep your finger on the pulse of these trends and try to time your application to catch a wave of favorable economic conditions. Shopping around for offers from different lenders can help you snag the best rate out there.
| Date | Prime Rate |
|---|---|
| 9/19/2024 | 8.00% |
| 7/27/2023 | 8.50% |
| 5/4/2023 | 8.25% |
| 3/23/2023 | 8.00% |
| 2/2/2023 | 7.75% |
| 12/15/2022 | 7.50% |
| 11/3/2022 | 7.00% |
| 9/22/2022 | 6.25% |
| 7/28/2022 | 5.50% |
| 6/16/2022 | 4.75% |
| 5/5/2022 | 4.00% |
| 3/17/2022 | 3.50% |
| 3/16/2020 | 3.25% |
| 3/4/2020 | 4.25% |
| 10/31/2019 | 4.75% |
| 9/19/2019 | 5.00% |
| 8/1/2019 | 5.25% |
| 12/20/2018 | 5.50% |
| 9/27/2018 | 5.25% |
To secure the most attractive home equity loan rates, you’ll need to demonstrate your financial fitness. Here’s your To Do list:
You need to have at least 20% equity in your home to qualify for a home equity loan. To calculate your home equity, simply subtract your mortgage balance from your current home value. For example, if your mortgage balance is $400,000 and your home is worth $550,000, you have $150,000 in home equity. Divide your equity amount by your home value to calculate your equity stake: in this example, 27%. It’s important to maintain a healthy amount of home equity to secure the best home equity loan rates and to provide a cushion in case of unexpected financial needs.
To secure the lowest home equity loan rates, you’ll need a credit score of 680 or higher. But lenders are really impressed by a 700 or above, as it lowers their risk. So how do you get there? Keep making those payments on time, maintain low credit card balances, and steer clear of new credit inquiries. By showing you’ve got a solid track record with your finances, you’ll be in a better position to negotiate terms and rates that work for you.
Your debt-to-income (DTI) ratio is a critical piece of the home equity loan puzzle. Lenders generally prefer to see a DTI under 50%, with 36% or less being the sweet spot. Keeping your DTI in check is a two-pronged approach: Whittle down your existing debt, and aim for a steady income. A lower DTI can open the door to more favorable loan rates and a larger borrowing capacity. Tackling high-interest credit card balances can help you present a more attractive financial picture to potential lenders.
Property insurance is a must-have for most home equity loans, especially in areas susceptible to natural disasters. The right coverage safeguards both you and the lender in the event of home damage. Make sure your policy covers your home’s full value, and consider additional protections such as flood or earthquake insurance if needed. Lenders might ask for proof of insurance before sealing the deal. By getting the right insurance, you can sidestep potential hiccups and ensure a seamless application for your home equity loan.
Utilizing our suite of tools and calculators is a smart move. They can help you get a handle on your borrowing potential and the monthly payments you might expect with a home equity loan. Our home equity loan calculator can show you how much you can borrow against your equity.
Enter a few details about your home loan and we’ll provide you your maximum home equity loan amount.
Punch in your HELOC amount and we’ll estimate your monthly payment amount for your HELOC.
Use SoFI’s HELOC interest calculator to estimate how much monthly interest you’ll pay .
Using the free calculators is for informational purposes only, does not constitute an offer to receive a loan, and will not solicit a loan offer. Any payments shown depend on the accuracy of the information provided.
When it comes to home equity loans, you’re looking at typical closing costs of 2% to 5% of the loan amount. These can include a range of fees, from appraisal and credit report to document preparation, origination, notary, title search, and title insurance. Lender costs can vary, so it’s smart to shop around and compare offers to snag the best deal. Keep in mind that while some lenders may offer “no-closing-cost loans,” they often come with higher rates.
The interest you pay on a home equity loan could be tax-deductible. If you use the loan for substantial home improvements, purchasing, or building a home, you might be in luck. As of 2025, couples filing jointly can potentially deduct interest on up to $750,000 of qualified home equity loans, and single filers up to $375,000. To claim this deduction, you’ll need to itemize your deductions on your tax return. The tax benefits could make a home equity loan even more appealing. But as always, it’s a good idea to chat with a tax advisor to see how this applies to your unique financial situation and to stay on top of current tax laws.
While a home equity loan is a popular choice, there are other ways to get equity out of your home. A home equity line of credit (HELOC) and a cash-out refinance are two alternatives. Each option has its own benefits and drawbacks, so it’s important to compare all your options to find the best fit for your needs.
What is a home equity line of credit? Imagine a credit card that’s backed by your home’s equity, allowing you to borrow up to a predetermined limit. HELOCs often feature variable interest rates, which can be both a pro and a con, as they fluctuate with the market. To qualify, you’re generally looking at a credit score of 680 or above (though 700 is preferred) and a debt-to-income ratio below 50% (but ideally below 36%).
HELOCs are a great option for those who need to borrow over an extended period, such as for home improvements. A HELOC interest-only calculator can help you estimate your minimum payment during the initial draw period, while a HELOC repayment calculator can show you what will come due after the draw period comes to a close.
Recommended: HELOC vs a Home Equity Loan
A cash-out refinance is a type of mortgage refinance, but a bit more involved. It’s when you take out a new mortgage that’s larger than your existing one, and pocket the difference in cash. This can be a great way to tap into a significant portion of your home’s equity, potentially up to 80% of its value. To qualify, you’ll need a minimum credit score of 620 and a debt-to-income ratio of 43% or less. Interest rates can be fixed or variable, with variable rates often offering more equity access. And here’s a perk: unlike a home equity loan, a cash-out refi means just one monthly payment to keep track of, which can simplify your finances.
Recommended: Cash-Out Refinance vs Home Equity Line of Credit
So, when you’re pondering a home equity loan in Asheville, remember the importance of a robust credit score, a modest debt-to-income ratio, and the need for comprehensive property insurance. These elements can sway the rates you’re offered and the overall cost of your loan. Leverage the tools and calculators at your disposal to estimate monthly payments, and compare offers from various lenders. Keep an eye out for closing costs and fees, and don’t forget to consider the tax implications of home equity loan interest.
And remember, there are alternatives like HELOCs and cash-out refinances to explore. It’s always a good idea to have a chat with a financial advisor to ensure you’re making the most informed decision.
SoFi now offers home equity loans. Access up to 85%, or $350,000, of your home’s equity. Enjoy lower interest rates than most other types of loans. Cover big purchases, fund home renovations, or consolidate high-interest debt. You can complete an application in minutes.
Unlock your home’s value with a home equity loan from SoFi.
A home equity loan is a versatile financial tool. It can be used for a variety of purposes, including large purchases, home renovations, and consolidating high-interest debt. The lump-sum payment and fixed interest rate make it a predictable and manageable financial tool.
The monthly payment on a $50,000 home equity loan is contingent on the interest rate and repayment term you opt for. Let’s break it down. At an 8.00% interest rate across 15 years, you’re looking at approximately $478 per month. But if you extend the term to 20 years, your monthly payment would drop to $418. Then increase the interest rate to 8.50% (again with a 20-year term), and your payment rises to $434. These figures underscore the significance of securing a competitive interest rate and selecting a term that not only keeps your payments manageable but also minimizes the total interest paid.
A $100,000 Home Equity Line of Credit (HELOC) typically has a variable interest rate, which can fluctuate based on market conditions. During the draw period, which often lasts 10 years, you may only pay interest on the amount you draw. For instance, at a 5% interest rate, the monthly interest-only payment would be about $417. Once the draw period ends, the repayment period begins, and you’ll pay both principal and interest. The exact monthly payment will depend on the remaining balance and the interest rate at that time.
The payment on a $25,000 home equity loan can vary based on the home equity loan rates and the term of the loan. For example, with a 7% interest rate and a 10-year term, the monthly payment would be approximately $286. However, if the interest rate is 8% and the term is extended to 20 years, the monthly payment would be about $188. These figures illustrate how the interest rate and term length can impact your monthly financial commitments. It’s important to compare different lenders’ offers to find the most affordable option that meets your needs.
The payment on a $30,000 home equity loan can vary depending on the rates and terms you secure. For instance, with a 10-year term at an 8.00% interest rate, you’re looking at approximately $364 per month. But if you opt for a 20-year term, again at an 8.00% rate, your monthly payment could be around $251, but you’d pay more in interest over the life of the loan. Choosing a term that suits your financial goals and budget is key. An online home equity loan calculator can be a handy tool for getting a ballpark figure and planning ahead.
There are a few things that can disqualify you from getting a home equity loan. If you don’t have enough equity in your home, have a low credit score, or have a high debt-to-income (DTI) ratio, you might not be eligible. Most lenders require at least 20% equity in your home and a credit score of 680 or higher. A DTI ratio above 43% can also be a red flag. In addition, not having adequate property insurance or a history of missed payments can impact your eligibility. To improve your chances, work on building your credit, paying down debt, and maintaining a stable income.
Home equity loans come with a host of advantages, such as fixed interest rates and regular monthly payments, which are great for planning your finances. They generally offer lower interest rates than unsecured loans, making them a smart choice for substantial expenses like home upgrades or consolidating debt. And the interest you pay might be tax-deductible if you use the funds for significant home improvements. Just remember to shop around and compare rates and terms from different lenders to get the best deal — and make sure you fully grasp the potential risks.
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*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
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